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Is Dalvik getting improved every Android version? I'm guessing if a quick convert like this was quicker it means Dalvik has a long way to go...

I didn't read the whole blog post yet (it's _really_ late here i Norway now), but at first glance I didn't see anything stating that it's actually faster than Dalvik in terms of general usage, only that they have faster structs and generics. That is as good as worthless information in terms of general usage. If they actually benchmarked a whole useful program, I'll guess they'll have much more similar performance, if not actually worse than Dalvik. Also, it's worth noting that Google has tested their code, and from what I can see, Xamarin has not. Thus, who knows what problems are lurking around in their code, and what effect solving those have in terms of performance.

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Awesome, so now Google can port Android from the patent minefield that is Java to the totally safe and free...

It was mainly done exactly for that reason:
"Unlike Sun with Java, Microsoft submitted C# and the .NET VM for standardization to ECMA and saw those standards graduated all the way to ISO strong patent commitments. The .NET framework is also covered by Microsoft?s legally binding community promise."